Division of Finance and Administration response

November 7, 2017

As you know from our previous discussions and the President’s more public recent communications, the University has been spending at a rate that exceeds revenues for the previous four years. This has reduced University reserves to an unhealthy level, and is quite simply, not sustainable.

Most of the departments within our Division manage to operate within their annual allocation/revenues. As a Division, we are not running a deficit, though we have relied on central one-time funds or division reserves to supplement and balance some of our budgets. Our Division is not unique in that regard, and this, in part, is what created the current predicament at the greater University level. Continual dipping into savings, or reserves, is no more sustainable for the University than it would be for our own household budgets.

Thus, we must get our annual spending in absolute alignment with our revenues. This will take time, the University has developed a three-year plan of reduced spending across the University. As a first step, all areas/colleges have been given a target by which spending must be decreased over last year.

The target for our Division is $597k, distributed across our four major areas (as shown on the document that I shared at our last staff meeting). In addition, we are the keeper of the general expense budget that has most university subscriptions and memberships that will require an expenditure reduction of $157k. To be clear, this is not a budget cut. The savings we realize will be kept by the areas, but those savings will not be available to spend. This will have the effect of increasing reserves to help offset deficits in other areas/colleges as they work to bring their spending in alignment with revenues.

While the budgets in our Division have been soundly managed, we continue to be challenged by the impacts of previous reductions. Because of your leadership and the diligence of your staffs, our Division is well known for efficiency and stretching every dollar. Still, we must do our part to help address the current challenge and restore fiscal health to the University.

As a Division, we also have to discontinue services and programs for which we have no permanent funds. Sadly, Performing Arts is one such program, and you likely have read the recent newspaper articles about our decision to discontinue reliance on reserves to subsidize the program.

Also, we have a particularly difficult challenge this year since we have not received our State capital budget. While this means a delay in starting any of our major capital projects and renovations, approximately $13M of that funding supports are minor repairs and preventative maintenance. Some of our facilities positions are funded on this budget and we have had to manage spending reductions well beyond the 2.5 percent reduction for now. You will recall that we have previously reduced positions based on lower capital spending. However this year will prove to be even more difficult without the state’s capital funding.

Most of the functions and activities performed by our Division are essential to the daily operations of the University and cannot be eliminated as a means to address reduced spending. Thus, to meet our target, we will have to consider service levels that match available funding and to consider other options for service delivery.

Most of our funding is tied to salaries, so we necessarily will be looking at all vacancies for possible elimination, delayed hiring, or reduced FTE, all of which will have an impact on our service delivery. We will also eliminate all but essential travel, as well as delay major equipment purchases to the extent possible. Every dollar we save today will get us closer to the goal of financial recovery.

I want to reiterate that the financial recovery plan will span several years, so please keep in mind that our actions this year will likely need to continue into future years.

Please share this information broadly with your staff, and I ask that you work with Vicky Murray in developing specific plans to meet our spending reduction target. Questions regarding our targets and reduced spending plans can be addressed to Vicky or me.